After one of its high-speed passenger trains was derailed in northern Slovakia last year, the largest Czech rail operator České Dráhy sent a formal complaint to its Slovak counterpart, ŽSR, highlighting the poor condition of the track network in Slovakia.

ŽSR’s CEO, while stressing his company’s commitment to safety, said the network was underfunded, something acknowledged by the Slovak Transport Ministry which referred to the poor state of railway infrastructure.

Then, in October, the Transport Ministry announced that high-speed InterCity trains between Bratislava and Košice will likely be canceled, meaning the minimum journey time on the 450km (280 miles) journey between Slovakia’s two main cities is to rise by at least 45 minutes. The government said it could no longer afford to support the service.

Developments like this — indicative of long-running shortfalls in public infrastructure investment and more recent belt-tightening — have come to symbolize Slovakia’s growing economic malaise. Despite 20 years in the European Union (EU), 15 years in the eurozone, and an advantageous position in the center of Europe, Slovaks now have the lowest net earnings, in terms of purchasing power, in the 27-member bloc, according to Eurostat data.

The imminent slowdown in east-west rail connections is compounded by the fact that successive governments have failed to deliver on decades-old promises to build a national highway network.

Bratislava and Košice, to the east, were supposed to be connected by a multi-lane highway in the 1990s — and the current prime minister, Robert Fico, assured voters the link would open before the end of his first administration in 2010. They are still waiting.

The mountainous route chosen for the highway, technical problems, procurement failures, and various other problems have pushed the project back repeatedly.

A tender for what should be the final section was announced only this summer. The delays have caused the costs to double, with approximately €1bn added to the bill. Costs are expected to rise further once a bidder is selected.

The transport minister’s statement at the time — “I hope and believe that this tender will run smoothly, within the legal deadlines, and won’t be the subject of many appeals and obstructions, as we often see in Slovakia” — seemed unconsciously to reflect how often previous large-scale procurements have become bogged down in legal challenges and corruption allegations.

(The minister is wise to be cautious: even when highways do get built in Slovakia, the interconnecting junctions occasionally, somehow, do not.)

There is still no firm end date for the completion of the route, meaning trucks will continue to crawl through villages and towns in northern Slovakia until probably at least the end of this decade.

Fortunately for at least some parts of Eastern Slovakia — a region that has long suffered from economic underdevelopment and the extreme concentration of national wealth in the distant south-west, around Bratislava, which is just a hop and a skip from Vienna — some private-sector investment is now flowing.

Carmaker Volvo is currently building a plant near Košice, which should open by 2026. It will be Slovakia’s fifth full-scale car factory and looks set to help preserve the country’s position as the world’s largest per capita car manufacturer. However, the success of the Volvo project hinges in part on the site’s direct connection not to Slovakia’s highway network, but to that of nearby Hungary, which is just 15km away.

In September, the government was forced to announce steep tax rises in an effort to bring down the budget deficit, which has risen towards 6% this year.

Slovakia’s fiscal situation has not been helped by a recent rise in the cost of debt servicing, with its borrowing costs diverging since 2022 from those of Germany and neighboring Austria; lenders are now demanding yields closer to those paid by heavily indebted Italy.

Besides a rise in the VAT rate of 3 percentage points, which will affect all consumers, car drivers will have to pay 50% more to use the still-incomplete highways. Meanwhile, the government’s decision to hike taxes on company profits and introduce a new transaction tax on company payments to suppliers has prompted analysts to warn that Slovakia is becoming less attractive to the kind of investments, especially in high-skilled sectors, that are needed to boost average wages.

The Fico cabinet blames the previous government, which lasted less than three years, for the current situation.

But governments led by Fico’s Smer party have now been in power for more than 13 of the past 18 years, making it ever harder to blame all of Slovakia’s long-term economic ills on other people’s failures.

The last major overhaul of Slovakia’s economy was implemented by the reforming governments of Mikuláš Dzurinda in the early 2000s; the resulting flat tax and market liberalization is credited with unleashing near-double-digit growth in the years before the 2008 financial crisis.

Smer campaigned in opposition to the reforms but left them mostly in place after winning power in 2006 and has done little beyond tinkering ever since.

Instead, its finance ministers have generated drama in other ways.

Robert Fico’s first finance minister, Ján Počiatek, was named Finance Minister of the Year/Europe by a magazine, mainly for his role in steering Slovakia into the eurozone in 2009 (a policy already set in train by the preceding government.)

However, he gained notoriety in Slovakia after being spotted by a tabloid on a yacht in Monaco owned by a Slovak financial group just before the final euro conversion rate was announced. The group’s currency traders reportedly made large sums by later betting on this exchange rate, leading to allegations by Počiatek’s predecessor of wrongdoing.

Počiatek later acknowledged a lapse in judgment, which he put down to a “lack of political experience”, but said, “I am 100% sure that I have not violated the law in any of its aspects.” Fico rebuked him but kept him on, saying the state had not been damaged.

The next Smer finance minister, Peter Kažimír, who was in office between 2012 and 2019, was accused of corruption after leaving office. Based on testimony from a former tax chief who had agreed to cooperate with prosecutors, a court in 2023 found Kažimír guilty of accepting a bribe. Despite this, he remains governor of Slovakia’s central bank to this day — despite calls from the president and prime minister at the time of his conviction to step down. He is appealing against the conviction.

Over the last five to 10 years, Smer has swung hard to the right and now leans heavily on conspiratorial, pro-Russian, culture-war messaging, an approach which helped it narrowly regain power in last September’s election.

Its most eye-catching financial measure before the recent tax rises was to double its own ministers’ salaries by means of tax-free bonuses earlier this year.

Fico himself, who was wounded by an assassin in May, was awarded a lifetime pension, apparently in recognition of his injuries (he has since recovered sufficiently to resume his duties.) The pension is in theory for all prime ministers, but the law was framed in such a way that only Fico qualified.

In fact, even the inflated ministerial salaries and new prime ministerial pension are still relatively modest by European standards. But they play very poorly among a population whose average salaries are much lower than politicians’, and who see their purchasing power continuing to recede for the foreseeable future.

James Thomson is a columnist for The Slovak Spectator, the Bratislava-based English-language newspaper and website. 

Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.

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